IR theories: Institutionalism

1. IR theories: Institutionalism Three perspectives on international politics

2. Weaknesses of realism • Neorealism can’t account forcooperation among states. • European integration • Military power can’t solve many of today’sproblems (climate change, refugee flows, etc.). • Non-state actors become increasingly relevant in global affairs. Hans Peter Schmitz

3. The core assumptions What realists and institutionalists share: • States are the main actors in global affairs. • States are rational and unitary actors. • States seek security and material gains. • Anarchy is the main obstacle to cooperation. Hans Peter Schmitz

4. Arms race: A Prisoner’s Dilemma States are rational actors with clear preference orderings: • Preference Ordering: (4,1) > (3,3) > (2,2) > (1,4) • (4,1): the other cooperates, you don’t (more security/power for you, less for the other party) • (3,3): both cooperate (security for both, along with lower costs) • (2,2): both defect (security for both, but higher costs) • (1,4): you cooperate, the other defects (less security/power for you, more for the other). Hans Peter Schmitz

5. Solving the Prisoners’ Dilemma: Liberal institutionalism • Cooperation under anarchy (Nau, p. 17): • Communication • Common problems/goals • Technological change • Strategies: ‘tit-for-tat’ and reciprocity/creation of international institutions Hans Peter Schmitz

6. Challenging realism (modestly..) • Neorealism: Anarchy among states • Institutionalism: The harmful effects of anarchy are slowly replaced by interdependenceamong states • While anarchy means the absence of a (world) government, it does not necessarily mean the absence of (self-regulated) governance. Hans Peter Schmitz

7. A liberal perspective: interdependence • Shared problems > interdependence > cooperation > institutions > peace and security • Define interdependence: “a reciprocal relationship between independent entities” Hans Peter Schmitz

8. Security strategies: trade and democracy, not deterrence • Create international institutions • Build trust among states • Use trade to spread democracy and wealth • Trade creates more interdependence and makes war less likely Hans Peter Schmitz

9. Cooperation under anarchy • Institutionalism shares many core assumptions about international politics with neorealism: • Structural theory of IR (system level; third image) • States as the dominant actors (units) • States as unitary and rational actors • But institutionalists come to different, more optimistic conclusions: • Interdependence among states creates incentives to cooperate and create forms of governance (not world government), such as intergovernmental organizations. Hans Peter Schmitz

10. Rational cooperation • States cooperate, because it is in their best interest. They rationally maximize gains by working with other states. • Cooperation is always the result of a state’s desire to do so. • Neoliberal institutionalism: states cooperate because it is in their best interest. • Sociological institutionalism: states cooperate because their identity has been shaped by NGOs and IGOs. Hans Peter Schmitz

11. Explaining cooperation • Can states learn to cooperate under anarchy? • Yes, when they use institutions to promote their interests: • Reciprocity (cooperation learned) • Public goods (cooperation required) Hans Peter Schmitz

12. The institutionalist argument Institutions Cooperation Interdependence creates incentives to build institutions. Institutions reinforce and facilitate cooperation and increase interdependence. Interdependence Repeated interactions among states create trust. States learn in interactions that cooperation pays off. Despite prevailing anarchy, states are capable of rationally taming the security dilemma. How? Positive feedback Hans Peter Schmitz

13. Interdependence and Cooperation: Institutionalism The International System Interdependence States From cooperation to security Security and peace Power Cooperation International Institutions Economic well-being Hans Peter Schmitz

14. What institutions do Provide an arena for negotiations Result: Creation of greater trust among states Provide information and increase transparency Spread the costs of cooperation evenly across all participants Deter free riding/defection. • Monitorthe compliance with agreements >>> Lowertransaction costs Hans Peter Schmitz

15. Role of institutions • International institutions are instrumental in facilitating cooperation by: • Lowering transaction costs/providing an arena for cooperation. • Providing information and transparency. • distributing the costs of cooperation evenly. • monitoring compliance with agreements. • providing impartial adjudication. Hans Peter Schmitz

16. Why do states cooperate? • Because they are part of a social system creating repeated interactions with others (Reciprocity). • Because they find themselves in situations, where desired goods can only be created and maintained collectively (Public Goods). Hans Peter Schmitz

17. 1. Reciprocity Prisoner’s Dilemma: Non-cooperation can pay in the short-term, but reciprocity and iteration create incentives for rational actors to cooperate. Hans Peter Schmitz

18. Reciprocity under anarchy • Cooperationis difficult, but not impossible to achieve under anarchy. • Reciprocity helps to create order in the absence of a central authority. • PD games are prevalent in IR and states can use a tit for tat strategy to entice cooperation in repeatedinteractions. • International institutions can facilitate the emergence of cooperation among states. Hans Peter Schmitz

19. 2. Collective/Public Goods • Reciprocity teaches actors to cooperate. • Public Goods are generally desirable, but their maintenance requires cooperation. • Tragedy of the Commons • Economic Theory: Market Failures • Collective or Public Goods (1) • Externalities (2) Hans Peter Schmitz

20. What are public goods? • Collective goods require cooperation for their implementation and maintenance. • Examples: Ozone layer, the oceans, the rainforests, clean water and rivers, collective security, free trade, etc. • Access to public goods is not restricted, they are not traded in a market: Increased use does not always lead to increased prices. Hans Peter Schmitz

21. Tragedy of the Commons Public good Individual choice Collective loss Consumption can not be restricted. Good is not traded in the market place. Individuals are in the short run better off exploiting the resource (before someone else does) Rational action leads to irrational outcome: the group as a whole is worse off: short-term individual gain vs. long-term collective loss Hans Peter Schmitz

22. Individual vs. collective rationality • Problem: Everyone has individually the incentive to exploit (beyond the carrying capacity), which creates collectively a sub-optimal outcome (destruction). • Free-ridingaggravates the problem by increasing the likelihood of defections. • Domestically, public goods are secured by state authority (punish free riders). Hans Peter Schmitz

23. Absent enforcement…. • Domestically, public goods are secured by state authority (provide it, level taxes, punish free riders, privatization, etc.). • Internationally, a hegemonic power like the United States can play a similar role. • But in the absence of central authority, states have to cooperate on an equal basis to create desirable public goods and protect them.

24. From Public Goods to Cooperation • If actors realize that maintaining the public good is preferable to destroying it, they will have an incentive to cooperate. • International institutions are instrumental in facilitating cooperation by: • providing an arena for cooperation. • distributing the costs of cooperation evenly. • “teaching” about public good problems. • monitoring subsequent agreements.

25. Extending institutionalism to the domestic: liberalism • Institutionalism can explain, why cooperation is possible, even under anarchy. However, it can not by itself identify the sources of interdependence. • The more ties exist among societies, the more instances of interdependence and collective action. • From institutionalism to liberalism Hans Peter Schmitz

26. From institutionalism to liberalism • What are some of the sources of interdependence? • Interactions between societies across state borders • Economic liberalism (market-driven): Trade and economic growth, market-driven • Social liberalism (not-for-profit): Interactions between societies (student exchanges, travel, remittances) • Democratic liberalism (principled): Recognition of the other as similar. • . Hans Peter Schmitz

27. Example: Economic liberalism • In contrast to the (neo-)realist claim that states are functionally similar, economic liberalism focuses on differences in geography, natural resources, and economic production. • David Ricardo’s (1772-1823) theory of “comparative advantage” • Specialization and production and subsequent trade allows countries to increase domestic wealth. Hans Peter Schmitz

28. What is “comparative advantage”? • If country A is relatively better at making wine, then it makes sense to put more resources into wine production, and to export some of the wine to pay for imports. Country A does not have to be the best in producing wine (absolute advantage), but only relatively better than others in order to gain from trade. • The gains follow from specializing in those activities which, at world prices, the country is relatively better at. Hans Peter Schmitz

29. Defining neoliberal instiutionalism • Institutionalism::An approach to international relations, which highlights interdependence and the role of institutions in facilitating cooperation among states (third image). • Liberalism::An approach to international politics, which highlights the role of domestic actors shaping state preferences (second image). • Neoliberal institutionalism: A theory bringing together institutionalism and liberalism. The “neo” indicates a newer version, which goes beyond the idealistic/liberal roots of the 18th and 19th century. Hans Peter Schmitz

30. IR theories and institutions • Realism • Instruments of powerful states • Liberal Institutionalism • Arenas for inter-state cooperation • Idealism/Constructivism • Actors independent of states Hans Peter Schmitz

31. Summary • Anarchy does not necessarily create violent conflict. • States can learn to cooperate, despite incentives against it. • Institutions help states to realize cooperation benefits. • Domestic interests (liberalism) explain, why states look for cooperation in the first place. • Weakness: explain power politics and the role of norms. Hans Peter Schmitz